How do you explain "funny" to a very serious and literal seven-year-old?

My son had a sense of humor by the age of 4. That’s when he told his first joke. But my 7 year old grandson has 0 sense of humor. He doesn’t even have the imagination most kids have.
Yesterday we were playing knock knock jokes. He tried making up his own but they fell flat. They were like, “Knock knock.”
“Who’s there?”
“Cow.”
“Cow who?”
“Cow how pow. FLYING COW!!”

Then I played the knock knock joke that comes out with “Little Old Lady Who?”
“I didn’t know you could yodel!”

Then my son did the “Banana, banana, banana, banana, orange” one.

So now he wants me to explain “funny” to him. What makes somethings funny and some not?

Help me out here!